SAO PAULO, BRAZIL -- Brazil's imminent acceptance of economic guidelines from the International Monetary Fund seems to have been quietly accepted by the majority political party that for two years angrily repudiated all outside controls on this $113 billion debtor.
As part of an agreement reached Nov. 6 with creditors to end a nine-month moratorium on interest payments to commercial banks, Brazil agreed to seek help from the IMF, thus ending a two-year estrangement.
After a two-hour explanation from Finance Minister Luis Carlos Bresser Pereira, the accord was this week described as "reasonable" by Ulysses Guimaraes, the president of the Democratic Movement Party (PMDB), which controls a congressional majority and dominates President Jose Sarney's coalition cabinet.
Only months ago Guimaraes described the IMF as "a scarecrow, almost a swear word." The party, which formed the backbone of opposition to past military regimes, insisted that accepting austerity could damage the social fabric and wreck the transition to democracy. So rejection of the IMF was a basic PMDB policy plank.
To win support for this sudden turnaround, PMDB member Bresser insisted he had shaken off IMF conditionality, which would allow banks to suspend future payments if the debtor's economic performance was poor. This was responsible for the collapse of six successive debt agreements before 1985.
"We have succeeded in breaking the link between the banks and the agreement we are going to reach with the IMF, which will be in line with our interests," said Bresser, who insists that the moratorium will only end in January when creditors agree to complete the $3 billion loan to cover 1987 interest payments.
Economists say all of Bresser's other preconditions for ending the moratorium -- formal acceptance by creditors that three-year rescheduling talks have begun, acceptance of "nontraditional" repayment strategies, and a zero spread representing a major advance on terms achieved by Mexico -- had been abandoned. Only the insistence that the IMF had nothing to do with the accord remained.
But confirmation from Finance Ministry officials that an IMF team was expected in Brasilia Nov. 16, just over a week after the agreement with banks was signed, has raised PMDB rank-and-file suspicions that the deal was not as "reasonable" as party leader Guimaraes had assured them.
The spokesman said the team, led by IMF Western Hemisphere division chief Thomas Reichmann, was on a "routine visit" and would not be negotiating. But they will gather information for an eventual economic stabilization plan, and this suggests the IMF accord will be negotiated concurrently and not after the rescheduling deal with the banks, as Bresser had indicated.
"I don't agree with Guimaraes and am frontally against this accord, which contradicts positions formally agreed on in the PMDB national convention last July," said Sen. Severo Gomes, of the party's Nationalist Wing.
"The party has already begun to mobilize internally against this agreement. We disapprove of what Bresser Pereira has done," he said, charging that the $500 million payment agreed on was simply wasting reserves.
PMDB Senate leader Fernando Henrique Cardoso was more cautious, and expressed concern about the timing of an IMF agreement. He said that the accord would be a success if banks agree to Brazil's terms and pay out $2 billion in January. Otherwise it would be a "terrible defeat."
"It's difficult for the PMDB to reject an accord negotiated by Bresser, as it was the party that forced him into the ministry," said political scientist Bolivar Lamounier. "He must have said something to gild the pill for the party, for this to slip down their throats more easily."
An eventual IMF accord will focus on controlling government spending -- this year at almost double the target figure of 3.5 percent of GNP -- and this will strike deep into the political pork-barrel that has benefited the PMDB as the senior coalition partner in Sarney's cabinet.
"When the moment of truth comes, the government will have to pay the bills," said economist Ibrahim Eris. "All this posturing from the PMDB about not going to the IMF was just self-protection from those who are living off the government deficit."
The prospect of elections at all levels next year may make the PMDB less willing to bear the austerity burden and again spur it into rejecting agreements with Brazil's creditors.
"The PMDB has been responsible for our economic difficulties and now they'll have to underwrite austerity in an election year. That's suicide," said political scientist Lamounier